BMS demands a People Friendly Budget

Author: BMS Date: 14 Jan 2016 14:33:04

Ref : Date : 04-01-2016

BMS places our appreciation for the 7.5% growth achieved by the NDA Government in spite of the global slowdown. We also congratulate the FM for his good initiative on the bonus hike with retrospective effect. These efforts have kindled expectations that the Govt. is gaining a pro labour, pro poor image.

We would like to present the following issues related to Budget for serious considerations:

Total revamping of the process of Budget preparation is required. This is the age of transparency and RTI. So the secrecy of Budget which is a colonial relic is to be abandoned.

Instead of mere consultation, participation of social sector representatives mainly Trade Unions in the Budget process and overall economic governance is required.

It is time for the Govt. to come out with a people oriented budget, since nearly 50% of the population is below poverty line. Common man should be its beneficiary. People have voted this Government to power for bringing change. Hence people need to be convinced about the direction of the change. There is a gross mismatch between the aspirations of the people and the slow progression of social transition. Paltry concessions or charity in the budget cannot change the economic condition of the people.

Last year budget shifted social sector welfare to the shoulders of the State Governments, whereas Central Government retained the corporate affairs. Budget outlay for social sector Ministries was reduced from 1.92% of GDP to 1.68%. Drastic cut to the tune of Rs.4.40 lakh crores was made in the allocation of funds for social sector schemes. Indirect tax was increased which is born by common man and direct tax was reduced which is born by the high income group. Corporate tax was reduced from 30% to 25%. Plethora of concessions and exemptions were given to corporates and big industries. In this contex, suggestions given by trade unions may go futile, as happened in the previous years.

For several years India has been displaying gross mismatch between growth and social indicators. It has a poor show in social indicators, even though growth indicators are encouraging. Social sector means labour, farmer, villagers, tribals, BPL, dalits, micro industries and other marginalized sections of the society. Hence Finance Ministry should create a separate ‘social sector affairs department’ coordinating ministries, experts and include representatives of such sectors, so that sufficient benefits reach directly to the real beneficiaries.

One significant reason for the failure of the Govt. schemes reaching the ultimate beneficiary is the colossal administrative cost. Administrative cost should not go beyond 5% of the total allocation. For the purpose DBT (direct benefit transfer) has to be implemented in all the Govt. schemes. To assist this facilitation centres can be identified at the ground level.

In the mad rush for growth, we have forgotten the economics of the development of the last man. Minimum wages, food security including price stability, health and education are the four pillars for “empowering” the marginalized section of India. Radical improvements in these aspects can revolutionize rural India with over 6 lakh villages.

Growth is related to wage of workers. Hence a “wage led growth” has to be thought of. Increase of wages means increase in the purchasing power of the people, which in turn will strengthen the market and the economy. Proper implementation of minimum wages can revolutionize the standard of living of the majority of the population.

Kothari commission has recommended allotment of 6% of the total budget for education. At present it is about less than half of it. Similarly health expenses should be at least 3% of the budget. Now it is only about 1%.

Unorganized sector requires a comprehensive decent work agenda including decent wages, working conditions, social security, welfare, safety, gender justice and job security. Achieving these things will accelerate our developmental process and social progression.

Country is losing quality jobs. Most jobs including Govt. jobs are gradually becoming temporary. Hence regularise contract labour and provide contract workers wages and all benefits on par with regular worker in that industry.

Workers’ Bank is to be opened for the general interest of the workers.

World Bank w.e.f. 2009 April, stopped using labour as an indicator in its “ease of doing business” as it had found that it is against the spirit of ILO mandate. But Indian Government still feels labour cost reduction and relaxation of labour laws are priority indicators in ease of doing business. Hence BMS strongly demands that reference to labour cost or labour law relaxation should be removed forthwith in all documents related to ease of doing business in India.

When agricultural sector as well as plantation sector is profit sector in other countries, they are largely not so profitable activities in India. This issue also has to be addressed. Provide support price to Tea, Rubber & Cardamom & other Agriculture Products. Create exclusive ministries for Fisheries and Plantation to boost up those Sectors. Agriculture also requires a package of reforms. Agriculture gives employment to more than half of the population. Public investment in agriculture sector must be substantially augmented as a proportion of GDP and total budgetary expenditure. Remunerative prices should be ensured for the agricultural produce.

In the case of our MSMEs and manufacturing sector, people without sufficient expertise and skill are handling these sectors most unscientifically. Govt. has to seriously consider bringing a colossal package for strengthening our MSMEs and manufacturing sector. Single window system has to be the base for ease of doing business.

The idea that FDI is a panacea for all economic maladies has to be discarded. On the other hand our manufacturing, industrial, agricultural and service sectors have to be strengthened.

Price control measures are important in the people oriented governance. Prices of medicines, onion, potato, cooking gas, rice, wheat, electricity, water, transport, petrol and diesel are very sensitive for the common man, which have even toppled Governments in the country. Education and medical care are becoming costly affairs inaccessible to the common man.

Gender budgeting is important in women empowerment. Gender specific provisions should find a mention in economic objectives and thrust areas of the Budget. General needs and economic issues of women are to be identified and provisions for economic assistance should be made. Girl child education cannot ignore the fact that girl children are pulled out of school for fetching water in villages. So allocation for drinking water facility is to be given serious attention. Most of the rural women come under the insecure job categories of casual, contract, home based, migrant workers. Health and social security including maternity assistance and child care, literacy and vocational training etc. are to be guaranteed for every woman. Family planning should be made compulsory irrespective of religion etc. to relieve women from repeated maternity sufferings. Micro level insurance coverage should be extended to every woman even in the remotest villages. Women should have equal access to financial credit, marketing, training, new technologies, information on SSI etc. Micro finance should be made available to women entrepreneurs with/without the assistance of Self Help Groups. ‘Right to life’ guaranteed by our constitution should include economic rights like financial assistance to destitute women including widows, old women, deserted women, wives with sick or alcoholic husbands, women belonging to bonded labour, migrant workers, forest workers etc. Working women’s hostels should be set up where there is a concentration of women workers.

Eco management is a duty of the Government in the interest of the future generation. So eco protection, energy conservation, waste disposal, green jobs etc. are to be taken care of in our mad rush for development.

Disinvestment is in fact a distress sale of the properties gained by the ancestors in Government. Sale of PSUs for generating fund for running the Government is to be stopped forth with. It is a sign of failure in revenue generation. Salaries of sick industries are pending.

Tax Reforms:

The tax structure needs total overhauling. Principle of “One nation one tax” in GST bill is a good beginning in that regard. Tax structure has to be more people/employee friendly. Detailed discussions with stake holders will be good.

Our GDP tax ratio is very low. Tax collection is about 16.6% of the GDP. This has to be considerably improved.

There should be a progressive shift from indirect tax system to direct tax. Indirect tax constitutes about 86% of the total revenue. It burdens each and every citizen, even those who are BPL. Whereas direct tax is collected from the creamy section of the society. Today even the direct tax system is heavily dependent on the medium salaried people; and high income group is largely left to enjoy their affluence. Compulsory PAN card system is also burdening more on the savings of the medium salaried people. So the income tax limit has to be raised to at least 5 lakh as recommended by Yaswanth Sinha Committee because the inflation especially food inflation is soaring sky high.

The fundamental approach to tax collection is, collect tax from the rich and subsidise the poor. But now in the globalised era it has become just the opposite. Government is subsidizing the rich and taxing the poor. The common man is funding the Government through the indirect taxes. Whereas Indian corporates are given all types of concessions and exemptions. Consequential revenue losses are reducing the social sector spending. Thus Govt.’s too much romance with corporates is creating colossal loss to the social sector. Further, there is deliberate tax-default by the big business and corporate houses leading to huge accumulation of unpaid direct tax dues which has already crossed more than Rs.5 lakh crore on direct and corporate tax account alone. Their share of NPA is rising. 40% of foreign debts are commercial loans taken by the corporates. Neither the corporate sector is improving their role in national economy nor the social sector is benefitted.

A Lakshman Rekha has to be marked in between corporate affairs and Finance Ministry even though incidently the Finance Minister happens to be the Minister for Corporate Affairs also.

We are anxiously looking forward on how far the Budget will be meaningful in supporting the development concerns of the people of India.

These observations are in addition to the viewpoints submitted by the Central Trade Unions jointly.